Is this wording legal in a quote/contract? Penalty for late delivery terms

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Dec 16th, 2022 4:13 pm

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Nov 24th, 2022 2:57 pm

aaaaaaaa [OP]: Newbie; Aug 24, 2021; 91 posts; 151 upvotes; Markham

Nov 24th, 2022 2:57 pm

Is this wording legal in a quote/contract? Penalty for late delivery terms

I am ordering something from a supplier which they assured will arrive by X date 2023. As I think there is a possibility that they can't do the delivery by the date, and only said they can so that I order from them instead of a different supplier, we verbally agreed over the phone to have a penalty for delays.

In the payment terms, I added a clause stating that there will be a 10k penalty per week of delay, which was agreed to. However I am wondering if this is actually enforceable, if they are 2 weeks late and I take off 20k, can they take me to court over this?

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Nov 25th, 2022 4:40 pm

ohnabatko: Deal Addict; Jan 19, 2007; 1380 posts; 723 upvotes; Torontario

Nov 25th, 2022 4:40 pm

On what INCO terms you agreed on?
I assume we talk physical goods here....

Nov 28th, 2022 2:51 pm

aaaaaaaa [OP]: Newbie; Aug 24, 2021; 91 posts; 151 upvotes; Markham

Nov 28th, 2022 2:51 pm

ohnabatko wrote: ↑ On what INCO terms you agreed on?
I assume we talk physical goods here....

Yes I am ordering steel, the contract states that we will need all of the steel specified in the contract delivered by X day essentially, and that there would be a 10k penalty per week even if they are late by 1 day. It's actually not urgent for us to get the steel on time, but I just hate it when someone lies to get a contact and added these terms.

Nov 28th, 2022 5:48 pm

Mercury048: Sr. Member; Jul 8, 2009; 731 posts; 312 upvotes; Toronto

Nov 28th, 2022 5:48 pm

Did they read and sign the contract?

Anyone can take you to court over anything, but if it's as you described, then they would lose. You're attaching a penalty for late performance. I don't see how it could be invalid, except perhaps if it is ridiculously high and the penalty becomes more than the cost itself.

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Nov 28th, 2022 7:51 pm

ohnabatko: Deal Addict; Jan 19, 2007; 1380 posts; 723 upvotes; Torontario

Nov 28th, 2022 7:51 pm

aaaaaaaa wrote: ↑ Yes I am ordering steel, the contract states that we will need all of the steel specified in the contract delivered by X day essentially, and that there would be a 10k penalty per week even if they are late by 1 day. It's actually not urgent for us to get the steel on time, but I just hate it when someone lies to get a contact and added these terms.

So no inco terms - interesting approach. so freight, insurance or duty?

Here's a link to what I mean: https://incodocs.com/blog/incoterms-202 ... ete-guide/.
I think any whole-seller by default will quote you FOB.

So prepare to be right

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Nov 28th, 2022 8:03 pm

aaaaaaaa [OP]: Newbie; Aug 24, 2021; 91 posts; 151 upvotes; Markham

Nov 28th, 2022 8:03 pm

ohnabatko wrote: ↑ So no inco terms - interesting approach. so freight, insurance or duty?

Here's a link to what I mean: https://incodocs.com/blog/incoterms-202 ... ete-guide/.
I think any whole-seller by default will quote you FOB.

So prepare to be right

Great thanks I will take a look. By the way, we are not ordering internationally, the supplier is a Canadian division of a Chinese company, so we are technically dealing with a Canadian company. We are using a CCDC contract as they will not only deliver, but install the steel as well.

Dec 16th, 2022 4:13 pm

aaaaaaaa [OP]: Newbie; Aug 24, 2021; 91 posts; 151 upvotes; Markham

Dec 16th, 2022 4:13 pm

In case anyone cares, the supplier verbally agreed, but refused to sign the contract due to this clause and we went with another supplier.

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